NSA spying may cost US companies over $35bn & do lasting harm to economy

The US government’s failure to reform the NSA spying programs and its opposition to encryption could cost tech companies over $35 billion. They are losing money as non-Americans are shunning US businesses and erecting trade barriers.

The warning comes following a newly released report by the Information Technology &
Innovation Foundation (ITIF). The technology watchdog first
warned about the potential fallout from the Snowden revelations
in 2013, when it estimated the US cloud computing sector could
lose anywhere between $21 billion and $35 billion.

The report, which was released on Tuesday, says the entire US
tech industry has suffered and the actual economic losses will
“likely far exceed” the $35 billion estimate.

Tarnished by association w/ ongoing U.S. surveillance policies,
tech sector likely to lose more than $35B in sales. http://t.co/Ck9OaP1ZzT

Though recent congressional battles have been about the Section
215 bulk collection, the ITIF says there have been no discussions
concerning programs such as PRISM, which “allows for
warrantless access to private-user data on popular online
services both in the United States and abroad.” There has
also been a lack of debate over the NSA’s program to subvert
encryption standards in the US and overseas, dubbed “Bullrun.”

As a result, policies at home and abroad sacrifice the
“robust competitiveness of the US tech sector for vague and
unconvincing promises of improved national security,” the
report’s authors, Daniel Castro and Alan McQuinn wrote.

Since Edward Snowden’s disclosure of the NSA’s spying programs in
2013, foreign businesses, governments and private citizens have
repeatedly told pollsters they would be reluctant to use American
technology products, from cloud storage to mobile devices.

“Policy decisions by the US intelligence community have
reverberated throughout the global economy,” the authors
argue, “putting intelligence gathering first and
foremost” while doing little to address the backlash against
US tech companies.

Foreign governments have responded by adopting protectionist
policies locking out US vendors, and citing fears of digital
surveillance to demand source codes from service providers. As a
result, many US companies have embraced strong encryption for
their mobile devices and cloud services, and have begun to oppose
government initiatives to subvert or ban encryption.

Castro and McQuinn argue these trends will hurt the entire US
economy in the long haul. The ITIF urges policymakers to increase
transparency concerning US surveillance and oppose initiatives to
weaken encryption or introduce “back doors” in software, as
demanded by law enforcement and intelligence communities.

To address protectionism, the foundation advocates working with
foreign governments to create an international legal standard for
government access to data, strengthening mutual legal assistance
treaties, and conclude “trade agreements like the Trans
Pacific Partnership that ban digital protectionism, and pressure
nations that seek to erect protectionist barriers to abandon
those efforts.”

“When historians write about this period in US history it
could very well be that one of the themes will be how the United
States lost its global technology leadership to other nations.
And clearly one of the factors they would point to is the
long-standing privileging of US national security interests over
US industrial and commercial interests when it comes to US
foreign policy,” write Castro and McQuinn.